BN Book Excerpt: Investment Clubs – How to Create Wealth Beyond Your Pay Cheque By Investing With Others by Tomie Balogun

My first attempt to gain an understanding of the intricacies of investing started with reading the book, ‘Rich Dad, Poor Dad’. Digging further into his books series, I read the ‘Rich Dad’s Guide to Investing’. In this book, Robert Kiyosaki asked his rich dad what advice he would give an average investor, and he answered, “Don’t be average”.

Those words struck a chord with me the minute I read them. They described what I have set as a core value for myself for many years. Since that time, I have been on a quest to understand what it means to be average investor.

What does it mean to be an average investor? Here are two (2) ways you can be an average investor

1) An average investor invests without a plan.
An average investor invests in random investment opportunities that promise good returns. However, an educated investor has a plan, understands his/her risk tolerance level, and knows the investment options required to arrive at the defined destination. Investing is not a product; it is a plan.

2) An average investor thinks in terms of income and not net worth
Income earned can easily trickle away if not preserved. When you measure your wealth only in terms of the cash that sits in your bank account, you are susceptible to inflationary pressures and the volatility in the value of the currency in which your cash is kept.

However, if you think in terms of net-worth, your wealth is captured in investment vehicles (assets) that can appreciate and probably stand the test of time, in terms of value. Your net-worth is therefore composed mainly of the assets which you have preserved and accumulated your income in over time.

3) An average investor invests as an individual and not as a business owner
Investing as an individual—in your own name—is great, but not smart investing over time. The best way to invest is to have a registered business make investments or buy assets for you. This is what rich people do to protect their assets and save on tax. They build businesses that own assets and pay most of their business and personal expenses.

When I discovered investment clubs, I thought they were a perfect way to stop being an average
investor. An investment club offers you an opportunity to build up your net-worth over time with like
minded people.

How the Onans’ Broke Average
The Onans’ were a young couple living in the United Kingdom (UK). They were interested in putting the cash they earned to better use, but they had no experience investing. Not willing to give up because they didn’t have any experience investing, they decided to read up on different asset classes to see which one they would be comfortable with or, at least, could start with their little money.

In their own words, ‘’We chose to invest in the property market (real estate) because it seemed like a stable opportunity, but it didn’t take a long time to realize we didn’t have enough money to get started. However, we knew we had to find a way to generate passive income if we were ever going to be financially free’’.

As a young couple, they were presented with the option to spend years saving up to invest on their own, but after speaking with a few people who were in the same situation as they were, they decided to set up a joint venture. That was the beginning of their investment club.

Three (3) couples (6 members in total) decided to pool money, ideas and expertise with the help of appropriate UK property experts. Each member had strengths and interests which informed role delegations within the club. Each member handled a role they enjoyed and could perform effectively.

The roles included; researching location and type of properties, sorting out the best financial or mortgage companies, dealing with the property experts, planning and administration of the club”. In the first year of existence, they purchased 4 properties off-plan and below market value; 1 property in Essex, 2 properties in Manchester and 1 property in Leeds.

The investment club helped the Onans’ and other members get on the property ladder in the UK quicker than they would have if they had tried to invest individually. They started out with a plan and they broke average.

You can break average with an investment club
An investment club is a group of people who consolidate funds to invest in business opportunities as one entity. It offers members a great opportunity to share risks and rewards in a way that contributes to the growth of common wealth in the society.

An investment club offers everyone a win/win solution. If you consider your funds limited in anyway, you can start an investment club with friends and, together, you can take advantage of investing with the pooled funds.

Our story
On a cool summer evening, five friends and former MBA classmates met in the lobby of a prestigious hotel in Lagos. They had a mission and, together, they crafted a plan to collaborate and invest in fast growing small and medium businesses.

I was one of the five, and my goal was to collaborate my way to financial freedom. I knew all about saving and investing by myself, but I wanted more. I wanted leverage. I was intent on increasing the investment opportunities I could take advantage of, so that I could increase my chances of achieving financial freedom. I also believed it was a great opportunity to dedicate my professional skills and experience to help growing businesses gain access to capital and implement the right growth strategy.

My friends and I set out with the audacious goal to build wealth by providing medium- to long-term capital to small businesses. We started our investment club to enable the African dream—access to capital for entrepreneurs who can change the bleak African story. Looking back now, I realize we were green-eyed and, like many fresh MBA graduates, we were naïve enough to believe we could change the world. They say it is only those who believe they can change the world that do so. We were willing to take our chances.

Our investment club, Midas Capital, was established in 2013 and has invested in 4 companies and 2 short-term projects spanning four (4) industries in Nigeria. All the founding members are still active members of the club. We started our investment club because we were determined to go beyond our average means.

I look back and realise there is no way I could have achieved everything I have today with investing, if I had not started an investment club. It’s time to push the narrative beyond saving for 30 years and waiting till you retire to achieve financial freedom. You can collaborate to earn more income and create wealth beyond your pay-cheque with investment clubs today.

My book is available in the Kindle store on Amazon. We will have hard copies available in a few weeks, Click here to be the first to know once my book is available for purchase in Nigeria.